Development levies

Background

The Minister of Housing and the Minister of Local Government announced a suite of reforms aimed at improving how infrastructure is funded and financed to support housing and growth across New Zealand.

Read the joint Ministers’ press release on the Beehive website

In February 2025 the Government announced decisions on the second stage of the Going for Housing Growth programme (GFHG), with improvements to infrastructure funding and financing tools to help get more housing built.

Read the joint Ministers’ press release on the Beehive website (28 February 2025)

As a package, these changes will provide councils and developers with a flexible funding and financing toolkit to respond to growth pressures and deliver infrastructure to land zoned for housing development. This is expected to reduce the current cross-subsidisation by ratepayers.

Going for Housing Growth Infrastructure Funding and Financing Tools

In February 2025 the Government announced decisions on the second stage of the Going for Housing Growth programme (GFHG). The decisions included:

Replacing development contributions with a development levy system

The purpose of development levies is to ensure councils (and other infrastructure providers) charge developers a proportionate amount of the total cost of capital expenditure necessary to service growth over the long term.
Levies will be calculated based on expected levels of growth and aggregate growth costs for each levy area.
Separate levies will be maintained for each service, such as water supply, wastewater, stormwater, transport, reserves, and community infrastructure.
Councils providing a service to part of a levy area that has particularly high growth costs will have discretion to charge a high-cost overlay (additional levy) on top of the base levy for that service.
Development levies will be subject to regulatory oversight and councils will be required to ensure they’re setting appropriate charges.
Councils will have discretion to phase in any transition to higher charges under the levy system to manage impacts on local development.

Making changes to improve the Infrastructure Funding and Financing (IFF) Act

Broadening the scope of the Infrastructure Funding and Financing (IFF) Act so that levies can be used in a wider range of circumstances.
A streamlined levy development and approvals process, particularly for proposals supported by landowners that would be subject to the levy.
Other changes to improve the flexibility of the IFF Act and support its use for a range of infrastructure projects.

Improving the flexibility of targeted rates for growth infrastructure

Councils will now be able to set targeted rates that apply only to new developments.
Councils will be able to use targeted rates and development levies together, where projects benefit existing residents and also provide for growth.

Supporting Growth Through a Development Levies System

We sought feedback on a partial exposure draft of the Local Government (Infrastructure Funding) Amendment Bill (the Bill) to implement the development levies system and on proposed regulations which will underpin implementation.

See the draft Local Government (Infrastructure Funding) Amendment Bill (PDF, 327KB)

The underlying policy for the Bill and proposals for regulations were outlined in the consultation document:

Going for Housing Growth: Supporting Growth Through a Development Levies System (PDF, 918KB)

You can find a brief overview of the underlying policy below:

Overview of proposed approach to the development levies system (PDF, 156KB)

Submissions

Te Tūāpapa Kura Kāinga and the Department of Internal Affairs sought written submissions on the proposals raised in the consultation document which related primarily to the draft Bill.

Submissions have now closed.

Further information

You can find more information about the Going for Housing Growth programme here:

Going for Housing Growth programme - Te Tūāpapa Kura Kāinga – Ministry of Housing and Urban Development

Local Government Policy (Department of Internal Affairs website)

We may release further information here as the consultation progresses to respond to common queries or if any new information becomes available.

Frequently Asked Questions

FAQs on development levies and the consultation (PDF, 209KB)

Contact us

If you have any questions regarding development levies, please email development.levies@mcert.govt.nz.